Regardless of your company or organization’s size, there are different types of legal obligations when owning / managing a business or non-profit. As a Director, you can be held personally liable in a number of ways. Those obligations do not just go away if the company has shut down or declares bankruptcy.
Originally designed to just protect the Directors & Officers themselves, some insurers policies are now issued on Management Liability wording. Meaning, the wording extends to also defend management, and organization itself.
Whether you’re a small non-profit or a for-profit corporation, Collis Insurance takes the time to understand your organization and find coverages to suit your needs.
D&O coverage is ever changing and can vary significantly between insurance companies. In this particular coverage – not all policies are created equal! Therefore, it’s important to work with a broker with experience in this type of insurance. Collis Insurance deals with leading Insurers who can offer you the best coverage and price combination.
Types of Events That Could Lead to a Claim
- Misleading representations
- Neglect or breach of duty
- Breach of a contract or copyright infringement
- Unpaid wages
- “Oppressed” shareholders creditors or employees
- Unpaid taxes
- Conflict of interest
- Improper dividend payments
- Improper issuance or repurchase of shares
- Take-over defenses (poison pill)
- Breached debt covenants
- Failure to ensure the corporation meets its financial obligations
- Wrongful Dismissal
Sources of Legal Action Against Directors & Officers
- Shareholders
- Employees
- Creditors
- Competitors
- Governments
- Regulatory Authorities
- Derivative action suits
- Class action suits
- Other third parties
- For example, if a statute require directors to file a report or maintain certain records, and these reports and records are not maintained, then the director may be liable for an offence under that statute.
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AND/OR Non-compliance of the organization with a statute. For example, directors can be liable for mismanagement, financial losses, wrongful dismissal, employee discrimination or failure to remediate environmental damage
What Does Directors & Officers Liability Cover?
Directors & Officers Liability coverage can protect just the Directors & Officers. However, more typically, will also cover the Entity, Management and Directors & Officers. If this is the case, it is important to make sure that limits are high enough to cover all of these exposures.
In Directors & Officers or Management Liability policies, extensions may be purchased to cover Employment Practices Liability, Cyber Liability, Privacy & Security Breach Services, Corporate Brand Protection, and Fiduciary Liability – insurer dependent.
